Zumiez downgraded to "neutral" on disappointing comp store sales
Zumiez Inc. (Nasdaq: ZUMZ), was downgraded today to “neutral” from “positive” by Susquehanna Financial after the action sports apparel and accessories retailer reported a decline in comparable store sales for the month of February after Wednesday’s close.
“Zumiez is off to a sluggish start to the new fiscal year with a below-plan February comp decline,” Susquehanna Financial analyst Thomas Filandro wrote in a research note today.
For the four-week period ended March 1, the Everett, Wash.-based small cap reported comparable store sales decreased 2.6%, compared with a comparable store sales increase of 12.4% for the same four-week period in 2007.
Total net sales for February increased 11.5% to $23.1 million, compared with $20.7 million for February 2007.
The analyst said the retailer’s weak results were primarily due to a drop in average store transactions as well as negative results in footwear and men’s apparel. Filandro said positive results in the retailer’s skate hard goods category somewhat offset the weakness.
“Given the below plan start to the new year, combined with difficult prior year comparisons and a weak consumer environment, we are taking a more conservative view for the balance of 2008,” wrote Filandro.
As a result, the analyst has lowered his EPS projection for 2008 by 8% to $0.90 from $0.98. He is now projecting year-over-year annual growth of 10%, which is below the company’s stated goal of 25% or better, according to Filandro.
“Despite the challenging retail climate, Zumiez remains uniquely positioned within the specialty retailing sector, as the company has embraced a highly differentiated store and field-level culture that is “empowering and quasi-centralized,” wrote Filandro.
The analyst noted that Zumiez does still possess a strong financial position, ending 2007 with no long-term debt and estimated cash of $53.1 million, or $1.81 per share.
Shares of Zumiez (ZUMZ) skidded 14.18%, or $2.49, to $15.07 at 1:28 p.m. ET. Shares of Zumiez have been trading in the range of $14.10 to $53.99 for the past 52 weeks.
